The Advantages of Farm Loans
Farm loans are government-sponsored loans that give farmers subsidies to open and operate swaths of land for farming. These loans are low cost and work to the advantage of the rancher or farmer. The benefits of these loans are myriad, and obtaining them is not extraordinarily difficult. Additionally, it's important to exhaust all government loan options before turning to the strictly private sector.
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USDA
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The United States Department of Agriculture sponsors most of the farm loans made in America. These loans are not always direct loans from the federal government. Instead the government approves certain lenders to make farm loans using government-approved standards and regulations. A list of approved lenders can be found on the USDA webpage (see resources).
Direct Loans
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The USDA makes operating loans and farm ownership loans on a direct basis. These loans are used to make land purchases, operating equipment purchases, as well as livestock, machinery, and tool purchases. The advantage of these loans is that new ranchers can finance expansion on their farms. Similarly, struggling farmers can apply for an OL (operating loan) to subsidize low revenues due to a poor farming season.
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Emergency Loans
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Ranchers and farmers are often the victims of natural disasters. These USDA emergency loans help disaster victims renovate and rebuild property lost, or replace damaged machinery. In order to qualify for an emergency loan, farmers must live in an area designated as a Federal Disaster Zone by the President or the Secretary of Agriculture. These loans have often helped farmers rebuild and recover instead of losing their businesses entirely.
SDA Loans
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Socially disadvantaged loans (SDA) are made to ranchers and farmers who've historically faced discrimination or prejudice due to ethnicity, gender, race, sexual orientation, or national origin. Such loans are made to African-Americans, Asian-Americans, Pacific Islanders, women, American Indians, Native Alaskans, and Hispanics. These loans are intended to offer advantages to marginalized individuals and communities.
First-time Farm Owners
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The FSA and USDA also offer funding to first-time ranchers and farmers. In order to qualify for these loans, borrowers must not have owned an operating farm in the last 10 years. Also, these loans are made to borrowers who show evidence of solid creditworthiness. These loans are intended to foster the creation of new farms in the United States.
Sometimes considered an antiquated business, farmers and ranchers contribute hugely to the U.S. economy, and the federal government's loan programs are intended to aid and foster these individual business owners.
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